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Patrick's promises at risk in budget

State is facing $72m shortfall; Tax revenues are expected to shrink

Email|Print|Single Page| Text size + By Matt Viser
Globe Staff / April 3, 2008

A list of programs at the core of Governor Deval Patrick's agenda, including campaign promises to boost spending on early education and increase local police funding, are in jeopardy under a budget proposal currently being drafted by House lawmakers.

House budget writers said yesterday that they are facing an additional $72.6 million shortfall in next year's budget, the result of new calculations on debt payments and labor contract agreements. That means that paying for everything on Patrick's list of new social and educational spending could be at risk.

"When you have a budget with the deficit we are talking about, any discussions relative to expansions are limited," said Representative Robert DeLeo, a Winthrop Democrat who chairs the House Ways and Means Committee. "Just trying to level-fund programs is a difficult enough task, without talking about expansions."

Lawmakers are focusing on the budget as the economy sputters and income tax revenue is projected to shrink as the recession takes hold. Patrick is expected to deliver a major address on the economy next week, and the House will unveil its budget by mid-April.

Losing some of his pet projects to House budget cuts would be a political blow to Patrick, who has made a major effort to increase funding in several areas, particularly education.

"These investments are vital to creating long-term economic growth and activity," said Kyle Sullivan, the governor's press secretary. He said the administration would work with the House and Senate to try to preserve those initiatives.

A point of negotiation is expected to be corporate taxes. Patrick's proposal to change the corporate tax codes by closing off what he calls loopholes would produce $297 million in new revenue next year from businesses. House Speaker Salvatore F. DiMasi has embraced the same changes, but wants a deeper reduction in corporate tax rates than Patrick has proposed. His proposal would bring in an additional $204 million next year.

DeLeo declined to say which of the governor's programs would be targeted, but he said all 96 programs costing an additional $213 million that have been proposed by the governor are on the table. Those programs include $45.8 million for community first initiatives, which fund programs for the elderly and disabled; $15 million to fund an additional 892 prekindergarten classrooms; and $4 million for local policing.

"Quite frankly, I'm just trying to keep the programs we have now," DeLeo said. "It's difficult to talk about building upon those. We're just trying to keep our head above water."

Patrick, DiMasi, and Senate President Therese Murray have been assuming that state revenues will grow 3.8 percent next year, and they have not adjusted that estimate even with a gloomy economic forecast.

But many believe that estimate will not hold up in a weakening economy.

"It would be wise for the three leaders to take a new look at the revenues . . . given that we're now apparently in a recession," said Michael Widmer, president of the Massachusetts Taxpayers Foundation, which is studying whether that forecast is still accurate.

Even if the state economy stays at current levels next year, budget writers would have to come up with $750 million, Widmer said.

"Can things become worse?" DeLeo said. "My feeling is yes. And I think it will get worse before it gets better."

The state is still on a sound footing for the remainder of this fiscal year, which ends June 30, state officials said. State tax collections are up $372 million over projections so far in the current fiscal year, according to figures released yesterday by the Department of Revenue.

Patrick submitted a $28.2 billion budget proposal in January that avoided large-scale cuts and included several spending initiatives and money-generating proposals, including $124 million from his ill-fated proposal to license three casinos, a plan that the House killed two weeks ago.

Two months ago DiMasi sketched out a set of budget priorities, ignoring the governor's use of projected casino revenues.

Instead, he is proposing raising $152 million by increasing the state's cigarette tax by $1 a pack, which would give Massachusetts the second highest cigarette tax in the country, behind New Jersey.

DiMasi also plans to use $427 million from the rainy day fund and, without indicating which areas he would target, wants to cut state spending by $100 million.

Matt Viser can be reached at maviser@globe.com.

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